2017 (2) TMI 428 - AT - Central Excise

Refund claim - amount paid during investigation - section 11B of Central Excise Act, 1944 - denial of the claim as barred by limitation owing to payment having been made about nineteen months before applying for refund - Held that - the bar of limitation prescribed in section 11B can be enforced, in equity, only with reference to date of order granting relief. Accordingly, the impugned order has erred in upholding the rejection of the claim as barred by limitation of time. The order of the appellate authority should have been implemented upon receipt of the application for refund. Failure to do so is also a patent act of judicial indiscipline which must be curbed if the tax administration of the country is to mature. Tax administrators must be responsible and responsive. The claim for refund is reinstated with effect from the date that it was originally filed grant of refund by setting aside the impugned order of original authority and show cause notice for denial of refund claim. Appeal allowed.

Summary

Issues:
Applicability of limitation prescribed in section 11B of Central Excise Act, 1944 to claim for refund arising from order-in-appeal.

Analysis:
The dispute in this case revolves around the interpretation of the limitation prescribed in section 11B of the Central Excise Act, 1944 concerning a claim for refund arising from an order-in-appeal. The appellant, M/s Mahindra & Mahindra (Automotive Sector), had paid a differential duty of &8377; 16,32,896/- on 10th February 2002, which was later set aside by the Commissioner of Central Excise (Appeals) on 29th August 2003. Subsequently, the appellant sought a refund of the amount through an application dated 1st October 2003. The refund claim was rejected by the refund sanctioning authority as being barred by limitation due to the payment having been made approximately nineteen months before applying for the refund. The impugned order-in-appeal dated 19th May 2005 upheld this rejection, leading to the present appeal.

Both the authorities involved in the case determined that the relevant date for computing the limitation is the date of payment of duty, thereby rendering the appellant ineligible for the refund claim. The appellant argued that the duty paid was merely a deposit as various judicial decisions have held, but this contention was not accepted by the first appellate authority. The authority concluded that the payment was voluntary and not under protest, as the appellant had filed an appeal against the demand, indicating a lack of protest at the time of payment.

During the proceedings, the Learned Authorized Representative contended that the time-limit specified in section 11B of the Central Excise Act, 1944 is binding on all officers under the Act and is the sole provision enabling refund sanction. It was argued that limitation ceases to apply only when duty is paid 'under protest,' highlighting the non-compliance with rule 233B of the Central Excise Rules as evidence that the duty payment was not under protest.

In support of their arguments, the Learned Counsel cited various decisions, including those of the Tribunal and the High Court, emphasizing that payments made during investigations are considered deposits and do not fall under the restriction of limitation in section 11B for refund claims. The decision of the Tribunal in Commissioner of Central Excise, Aurangabad v. BCL Forgings Ltd was particularly highlighted, which clarified that filing an appeal against an assessment order constitutes a protest, eliminating the need for a formal protest letter as required by Rule 233B.

The crux of the issue lies in the interpretation of the law regarding the recording of protest and the applicability of the limitation prescribed in section 11B of the Central Excise Act, 1944 to refund claims arising from appellate orders. The judgment emphasizes the equitable application of the law, focusing on the spirit rather than the letter of the statute in sanctioning refund claims. It underscores the importance of appeals as protest payments and suggests that the existing framework for refunds should accommodate judicially ordered restitutions seamlessly, even if not explicitly provided for in section 11B.

The final decision of the Tribunal sets aside the impugned order, reinstates the claim for refund, and emphasizes the need for responsible and responsive tax administration. The judgment clarifies that the limitation under section 11B should be enforced with reference to the date of the order granting relief, rather than the date of payment, to ensure fairness and equity in refund processes arising from appellate resolutions.